The Gap, Inc. (GAP) Business Profile

What it does

The Gap, Inc. sells apparel, accessories and personal care products for men, women and children. Founded in 1969 and headquartered in San Francisco, the company is led by President and Chief Executive Officer Richard Dickson.

Its brands address different parts of the apparel market. Old Navy focuses on value-priced fashion for a broad customer base. Gap sells casual apparel and accessories, including collections for children and babies. Banana Republic sells apparel through its regular and factory stores, while Athleta focuses on performance and lifestyle products for women and girls.

Customers can shop in company-operated stores and online. Franchise partners also operate stores and websites using the company’s brands, and licensees sell products under its brand names. Gap designs most products sold under its brands and has them manufactured by independent sources around the world.

The company connects its physical and online operations through services such as buying online and picking up in store, ordering in store, and shipping from stores. Its brands share investments in supply chain and technology, while their products and marketing retain separate identities. Gap also uses customer purchasing data to inform product and merchandising decisions.

How it makes money

Gap earns most of its revenue by selling merchandise in stores, online and through franchise and licensing agreements. It designs and markets a mix of basic and fashion-led products, then purchases merchandise from vendors for sale to customers. Its factory and outlet stores also offer products designed for those channels.

The business is managed through Old Navy Global, Gap Global, Banana Republic Global and Athleta Global. Because the brands have similar products, suppliers, customers and distribution methods, their results are combined into one reportable segment. Old Navy and Gap are the company’s largest brands.

Net sales were $15.4 billion for fiscal 2025 and $3.7 billion for the second quarter of fiscal 2026. In fiscal 2025, sales growth was driven primarily by online sales, with increases at Old Navy and Gap partly offset by Athleta.

Pricing varies by brand and product. Old Navy emphasizes value, while Athleta sells performance and lifestyle apparel. Gap uses promotions and markdowns as part of retailing; markdowns also help clear slow-moving merchandise and incomplete size or color assortments. The company’s fiscal 2025 gross margin was 40.8 percent, reflecting revenue after cost of goods sold and occupancy expenses.

Merchandise purchases are not contracts for recurring revenue: customers decide whether and when to return. Gap nevertheless operates a loyalty program that lets customers earn and redeem rewards across its brands. It also receives revenue sharing from private-label and co-branded credit cards provided by a financing company, as well as revenue associated with gift cards and loyalty points that are not expected to be redeemed.

Customers and how it sells

Gap serves individual shoppers across age groups through brands with different product and price positions. Old Navy sells value apparel for a broad audience; Gap has adult, children’s and baby collections; and Athleta serves women and girls. Banana Republic offers apparel through company-operated, factory and franchise locations as well as online.

As of January 31, 2026, company-operated stores were located in the United States, Canada, Japan and Taiwan. Franchise agreements extend the brands across Asia, Europe, Latin America, the Middle East and Africa. Franchise partners operate their own stores and websites, while licensing agreements allow other businesses to sell products using Gap’s brand names.

Gap ended fiscal 2025 with 2,474 Company-operated stores and approximately 1,000 franchise store locations. Shoppers can also use brand websites and services that connect online orders with stores. The company’s Encore loyalty program allows rewards to be earned and redeemed across its brands, and it uses customer data to personalize content and offers.

The business typically sees its sales peak during the end-of-year holiday period. Gap hires seasonal employees, primarily during that period, and builds inventory ahead of the holiday selling season.

Suppliers and costs

Gap designs most products sold under its brands but relies on independent manufacturers. It purchases private-label and other merchandise from approximately 200 vendors, whose factories are in about 30 countries. Substantially all merchandise purchases during fiscal 2025, by dollar value, came from factories outside North America.

The two largest vendors accounted for approximately 9 percent and 8 percent of the dollar amount of fiscal 2025 purchases. Factories in Vietnam accounted for approximately 27 percent of fiscal 2025 purchases by dollar value, and those in Indonesia accounted for approximately 21 percent. Substantially all foreign merchandise purchases are negotiated and paid for in U.S. dollars.

Major uses of cash include inventory, leases and occupancy, personnel, shipping, equipment and taxes. The brands share supply chain and technology investments. Gap also funds stores and distribution centers and carries inventory ahead of the holiday season.

Higher U.S. tariff rates increased cost of goods sold during fiscal 2025. Gap estimated the effect of tariff costs, net of mitigation, at approximately 1.2 percentage points of net sales in that year. Changes in sourcing costs, import restrictions or vendor operations can affect the business.

Competitive position

Gap competes with local, national and global apparel retailers in stores and online. It does not name specific competing retailers. Competition involves anticipating apparel trends, attracting traffic, pricing products, maintaining brand recognition and fulfilling orders. Gap also needs to respond to changes in digital shopping and social media engagement.

The company owns the trademarks for Old Navy, Gap, Banana Republic and Athleta, and controls brand development from product design and distribution to marketing and merchandising. It uses a shared loyalty program and customer data to tailor offers and guide product decisions. Shared supply chain and technology investments support operations across the brands.

Gap reported that its namesake brand gained market share in the second quarter of fiscal 2026. It also reported that upgraded Gap brand stores were outperforming the rest of that brand’s fleet.

Our reading: The brands and their trademarks provide a meaningful basis for differentiation, but their value depends on keeping products and marketing relevant to shoppers. Our reading: Cross-brand rewards and connected store and online services give customers reasons to return, though they do not prevent shoppers from buying elsewhere. Our reading: Shared infrastructure can support several brands, but independent sourcing and competing demands for customer attention limit how far it insulates Gap from rivals.

Growth opportunities

Gap’s growth plans include strengthening its core apparel business while expanding beauty and accessories, increasing loyalty engagement and investing in technology. The company also seeks to improve its cost structure and use shared capabilities across its brands.

At Old Navy, the company launched its Old Navy Beauty Co. collection nationwide and is introducing Old Navy Sport as an activewear brand. Gap is also expanding Old Navy’s partnership with Fanatics to offer a licensed sports merchandise collection. At the Gap brand, it relaunched its fragrance line and plans to expand accessories beginning with bags.

The company is remodeling Gap brand stores and expects to complete approximately 35 remodels in fiscal 2026. Its planned capital spending also includes new stores and remodels at Gap and Old Navy, along with technology and supply chain investments.

Recent brand performance has varied. In the second quarter of fiscal 2026, Gap brand comparable sales increased 10%, Banana Republic comparable sales increased 3%, and Athleta comparable sales declined 12%. Old Navy comparable sales declined 4%, as seasonal assortment weakness and slower traffic affected results. Gap said Old Navy sales improved in August as fall products arrived.

For fiscal 2026, the company expects net sales growth of 1% to 1.5%. It expects comparable sales growth at the Gap brand and Banana Republic, while its Athleta outlook assumes trends similar to the first half.

Structural risks

• Fashion and execution: Gap must anticipate changing apparel trends and customer preferences, set competitive prices and attract shoppers. At Old Navy, the company said assortment and pricing decisions contributed to declines in dresses, shorts and swimwear in the second quarter of fiscal 2026.

• Sourcing and tariffs: Most merchandise is purchased from factories outside North America. Import restrictions, tariffs, taxes or vendor disruptions can affect operations, and higher U.S. tariffs increased cost of goods sold in fiscal 2025. Gap remains mindful of potential volatility in U.S. tariffs and energy prices.

• Inventory and fulfillment: Gap must manage inventory and order fulfillment, including stock built ahead of the holiday season. Slow-moving products and incomplete assortments can require markdowns; inaccurate demand estimates can affect operating results.

• Consumer spending: Economic conditions, inflation, interest rates and other policy changes can affect customer behavior. Gap’s sales normally peak during the holiday period, making the timing of demand and inventory important to its operations.

• Technology and security: Gap relies on a complex platform that combines legacy and modern systems, as well as third-party cloud providers for e-commerce and other systems. Data or security problems could disrupt operations, affect consumer confidence or result in liability.

• Franchise and credit programs: Franchise and licensing businesses face risks outside Gap’s direct control. Income and cash flow from its private-label and co-branded credit card programs could also decline.

Bottom line

Our reading

Our reading: Gap is a portfolio of apparel retailers built around distinct brands, with shared sourcing, technology and customer programs supporting both stores and online sales. Its exposure is to the combination of fashion execution, holiday demand and imported merchandise costs. Recent differences in brand performance show that progress at one label does not necessarily carry across the portfolio.